With Profits Fund: A 1% contribution charge. All other charges are allowed for in the annually declared bonus rates.

Unit-linked Funds: A difference - usually 5% - between the prices at which units are bought (the offer price) and sold (the bid price), plus an annual investment management charge of 0.75% which is applied to the value of each unit linked fund before declaring unit prices. The amount of money invested ("the allocation rate") depends on the size of the investment and is shown in your personal quotation.

Deposit Funds: 100% of money is invested to earn a 'net of charge' interest rate.

Past performance is not necessarily a guide to the future. For unit-linked Funds the value of units can go down as well as up. The future rate of bonuses in the With Profits Fund is not guaranteed, nor therefore is the rate of growth of your investment. Terminal bonus can be reduced or removed retrospectively without notice. If money invested in the With Profits Fund is taken out at any time except on death or at normal retirement date, then the amount paid out may have to be reduced to reflect the current market value of the underlying assets. This is known as a Market Value Reduction.

• You may pay a regular contribution. Please note that while there are no minimum contribution requirements when investing regularly in the With Profit and Deposit Funds, the minimum monthly contribution to the Unit-linked funds is £20.
• You may also make lump sum contributions of at least £200 at any time.

Maximum contributions

• In each tax year, the total amount you pay in pension contributions is limited to 15% of your salary. As you already pay a standard contribution of 6% of your salary to the Scottish Teachers' Superannuation Scheme, this means that you can usually pay up to a further 9% in any tax year by way of AVCs. This includes AVCs to Prudential, the Past Added Years facility or to a FSAVC.
• Be aware, however, that other Inland Revenue Limits may restrict the income which can be paid from your AVC fund at retirement. Most people's benefits will be well below this figure - but, as a precaution a check may be made to identify if you will be affected by these limits.

Flexibility you can enjoy

• As you prefer, you can pay fixed contributions (say, £50 a month) or a set percentage of your earnings (say, 5%).
• You can increase or reduce your contributions at anytime.
• You can even take a "contribution holiday" - stopping your payments altogether for a while, then starting them up again later.
• You can invest single amounts as one-off payments whenever you choose, subject to Inland Revenue maximums previously mentioned.

1. Income tax relief

• Your AVC's will be deducted from your pay before your salary is paid to you and before tax is calculated.
• Under the PAYE system you only pay tax on your reduced earnings, after your AVCs have been deducted.
• You therefore get full income tax relief on your regular contributions immediately - at your highest marginal rate of tax. The procedure is automatic.
• If you make a single contribution by cheque however, you will need to claim the tax relief from your local inspector of taxes. Prudential can send you a letter to help with this.

2. Tax-free build up

• Your contributions will be put into a pension fund which holds investments such as shares, cash deposits and other assets.
• If you were to buy these investments yourself, your returns would normally be taxable - but, because they are held in an approved pension fund, they can grow free from most UK taxes.
• The pension fund does not pay tax on any increase in the value of the investments. Neither does it pay tax on the income it receives from the investments (although it is unable to claim back the tax already deducted from the dividends earned on UK shares).
• With this freedom from tax, money in pension fund should grow much faster than in most other forms of investment.

A range of Funds are available

Discretionary Fund - medium risk

International Equity Fund - high risk

• For the With Profits Fund there is a 1% contribution charge. All other charges are allowed for in the annually declared bonus rates. Conversely, with the Deposit Fund we invest 100% of your money and declare an interest rate net of our charges.
  
  If money invested in the With Profits Fund is taken out at any time except on death or at normal retirement date, a "MVR" may be applied.
• With the unit-linked funds, however, you buy units at the "offer" price - and, when you eventually sell them, you receive their value at the prevailing "bid" price. The "bid" price of a unit is used to determine the value of your account or for switches to other funds. Provided we do not need to sell assets, the bid price is 5% less than the offer price, and so represents an initial investment charge of 5%. There may also be a rounding adjustment which will not be more than 0.1p. (If we have to sell assests, we will base the unit price on the highest ascertainable market bid price of the underlying securities, reduced by the cost of selling them.)

As we invest your money, we apply what is known as an allocation rate, which becomes more attractive the more you invest, as described in the table below:-

Providing your benefits
Although you cannot take a cash sum from your AVC account at retirement, you can decide how the money in your AVC account will be used to provide you with extra benefits:-

• You will receive an extra pension for the rest of your life, to supplement your income from the Scottish Teachers' Superannuation Scheme.
• Your spouse can receive an extra pension, starting on your death.

If money invested in the With Profits Fund is taken out at any time except on death or at normal retirement date, a "MVR" may be applied.

Additional flexibility

You can make other important choices too:-

• You can choose a pension with a guaranteed minimum payment period - usually 5 years. Then, if you die during the first 5 years of your retirement, the balance of any pension payments, to the end of the guaranteed period, will normally be paid as a lump sum to your estate.
• You can choose a pension that increases annually, to provide some protection against the effects of inflation.
• You can arrange for your spouse's pension to increase annually.
• You can buy your pension benefits from Prudential - on the rates that we offer at the time of your retirement - or, if you can obtain better rates elseware, you can exercise your "Open Market Option" and use your AVC account to purchase a pension with that provider.

Whatever you decide, all pensions are taxed as earned income.

Providing higher death benefits
If you would like your dependants to receive greater benfits in the event of your death, you can use part (or even all) of your AVC's to provide them with a substantial lump sum or regular income. AVC's are one of the most affordable ways of providing life assurance and income for your family, because income tax relief on your contributions reduces the cost considerably.

• The minimum cover that may be taken out with Prudential is £5,000.
• The total death grant is subject to an overall Inland Revenue maximum of 4 times annual salary. The Scottish Teachers' Superannuation Scheme currently provides 2 times final pensionable salary.
• The maximum pension for each dependant is also subject to Inland Revenue limits - and your Prudential representative will be pleased to advise you of these.

To pay for this valuable extra protection - Known as Additional Death Benefit, cover is granted in return for a monthly premium deducted from your AVC's until you retire, leave service, or cancel the option. 

CJR Associates 
INDEPENDENT FINANCIAL ADVISERS
CJR Associates, 32-34 Ferry Road, Edinburgh, EH6 4AE
Telephone: (0131) 467 7406 Fax: (0131) 467 7406
A Member of I F A Network - Which is regulated by the Personal Investment Authority
One of the U K 's Leading network of Independent Financial Advisers
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 To get to know more about how CJR Associates can help you in the many area's of independent financial planning, investments and pensions, call 0131 467 7406 or 01896 757223 or e mail us on cjrassociates@lineone.co.uk

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Advice provided to you is totally independent. 
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